A Problem Worse Than Piracy? The Ridiculous Structure Of Online Music Licensing Deals

from the can't-make-money-this-way dept

We've pointed out many, many times in the past that the absolute best (and perhaps only) way to really get people to move away from infringing is to offer better, cheaper, more convenient and feature-filled legitimate services. But those are pretty difficult to come by -- in part because of the insane demands by the legacy entertainment industry players. Why do you think it took over two years for Spotify to finally come to the US? Because the labels demands were crazy and unsustainable. Michael Robertson is now revealing some of those demands, but sums it up best in his first paragraph:

Imagine a new hot-dog selling venture. Letís also say thereís only one supplier to purchase hot dogs from. Instead of simply charging a fixed price for hot dogs, that supplier demands the HIGHER of the following: $1 per hot dog sold OR $2 for every customer served OR 50 percent of all revenues for anything sold in the store. In addition, the supplier requires a two-year minimum order of 300 hot dogs per day, payable all in advance. If fewer hot dogs are sold, there is no refund. If more than 300 hot dogs are sold each day, payments to the supplier are generated by calculating $2 per customer or 50 percent of total revenues, so an additional payment is due to the supplier. After the first two years, the supplier can unilaterally adjust any of the pricing terms and the shop can never switch suppliers.

Doesn't seem like a particularly good business. When you hear of deals like that, it's kind of amazing that any of these businesses exist at all.